Cefic: the coexistence of 'danger' and 'machine' in European chemical industry

Recently, Marko Mensink, Director-General of the European Chemical Commission (Cefic), said that the European chemical industry was being affected by new global political and economic fluctuations. These impacts provide exciting opportunities as well as uncertainty. For the European chemical industry, trade frictions between the United States and China and Britain's separation from Europe are the most concerned economic events in the region, and the market also shows a wait-and-see state. According to ICIS's report over the past few weeks, the purchasing managers'index (PMA) has declined in major regions of the world. In this regard, Mensink expressed his views. "By the end of this year, international market uncertainty is increasing and market growth is slowing down," he said. Due to uncertainty, some related investment decisions are being postponed. The US-China trade frictions and Britain's demise from Europe are economic events of great concern to Europe. In response to trade frictions, Mensink said that the trade war between the US and China would lead to a reordering of Global trade flows rather than a direct reduction in global demand. He believes that population growth has increased the consumption of chemicals and that the global market as a whole will still grow considerably, but for Europe, the global market will become more fragmented. "China will become more self-sufficient, the Middle East may supply more chemicals to Asia, and as new U.S. polymer production capacity comes into operation, polymer imports may decrease, and competition with European companies in Asia and Latin America will become more intense. In this case, Europe will have to find a way out."

Mensink pointed out that as trade between regions may decrease, the localization strategy of production becomes more important for global industrial companies, and Europeanized enterprises will continue to invest in China and the United States.

In response to the possible impact of Britain's withdrawal from Europe, Mensink said he was optimistic that the EU and the UK could reach a withdrawal agreement because it was in everyone's best interests, and Cefic had been promoting the EU and UK chemical regulatory links after the withdrawal from Europe. However, Mensink also said that if Britain eventually withdraws from Europe without agreement, the tariff and logistics management of enterprises will become extremely complex, which will change the cost structure and trade flow of European chemical enterprises.

Despite the problems caused by market uncertainties, Mensink believes that the European chemical industry is also facing more opportunities. Overall, in the next 20 years, new markets, digitization, circular economy and artificial intelligence in Africa will become new opportunities for the European chemical industry.

For the African market, Mensink said that Africa has great potential as a European chemical export market for European enterprises. Mensink pointed out that, unlike other parts of the world, Africa has a strong potential for population growth. For example, he said that by 2050, Africa's Nigerian population is projected to reach about 500 million, the same as the population of the entire European Union. In addition, southern Europe is similar to Africa, and it is relatively convenient for European chemical companies to explore the African market. In terms of circular economy and digitalization, Mensink said that Cefic was developing a mid-century strategy focusing on the impact of digitalization and circular economy. Recycling economy involves more cooperation in different fields of value chain, which may lead to blurred boundaries of traditional fields. He believes that this has happened. In September, Dow, the US chemical giant, said it was working with Tata Steel to produce syngas and naphtha from waste furnace gas. In addition, circular economy will have an impact on the demand for raw chemicals, but this will be a long-term process, because compared with the whole chemical market, the quantity of recycled chemicals is very small, but it will certainly change in this direction in the future. He pointed out that glass, metal and paper industries have adapted to the business model of large-scale recycling, and the future of the chemical industry is the same. In terms of digitalization, Mensink believes that AI and big data will change the way the chemical industry produces and allow continuous improvement. In the next 20-30 years, AI and big data will become game changers in the chemical industry. Promoted by the transformation of digital and circular economy, a new era of chemical industry may be ushered in in 2020-2030.